Informational Hold-Up, Disclosure Policy, and Career Concerns on theExample of Open Source Software Development

We consider software developers who can either work on an open source project or on a closed source project. The former provides a publicly available signal about their talent, whereas the latter provides a signal only observed by their employer. We show that a talented employee may initially prefer a less paying job as an open source developer to commercial closed source projects, because a publicly available signal gives him a better bargaining position when renegotiating wages with his employer after the signal has been revealed. Also, we derive conditions under which two effects suggested by standard intuition are reversed: a 'pooling equilibrium' (with both talented and untalented workers doing closed source) is less likely if differences in talent are large; a highly visible open source job leads to more effort in a career concerns setup. The former effect is because a higher productivity of talented workers raises not only the value but also the cost of signaling; the latter stems from more effort and the choice of a high visibility job being substitutes for the purpose of signaling. Results naturally apply to other industries with high and low visibility jobs, e.g. academic rather than commercial research, consulting rather than management

Social Ties and User Generated Content: Evidence from an Online Social Network

We use variation in wind speeds at surfing locations in Switzerland as exogenous shifters of users' propensity to post content about their surfing activity onto an online social network. We exploit this variation to test whether users' social ties on the network have a causal effect on their content generation, and whether conent generation in turn has a similar causal effect on the users' abilty to form social ties. Economically significant causal effects of this kind can produce positive feedback that generate multiplier e¤ects to interventions that subsidize tie formation. We argue these interventions can therefore be the basis of a strategy by the rm to indirectly faciliate content generation on the site. The exogenous variation provided by wind speeds enable us to measure this feedback empirically and to assess the return on investment from such policies. We use a detailed dataset from an online social network that comprises the complete details of social tie formation and content generation on the site. The richness of he data enable us to control for several spurious confounds that have typically plagued empirical analysis of social interactions. Our results show evidence for significant positive feedback in user generated content. We discuss the implications of the estimates for the management of the content and the growth of the network